In addition, the Electronic Transaction Association (ETA), the leading industry association of the credit card processing industry has a link right off their "latest news" section of their homepage entitled, AdvanceMe Patent Ruled Invalid.

The Wall Street Journalwrote about the AdvanceMe patent invalidation and referenced the NY Times article specifically how myself, David Goldin, President & CEO of AmeriMerchant was instrumental in invalidating the patent.

Prepaid Trends (page 8 of this issue) talks about how the US District Court ruled the AdvanceMe Patent invalid and I am quoted in the article saying, "If AdvanceMe had won, it would have had a legal monopoly on a patent that was not a novel idea."

It has even hit the international press. The International Tribune published a story about how the prior art was found to invalidate the AdvanceMe patent.

The intellectual property legal community has even given the Merchant Cash Advance Blog credit in assisting the invalidation of the AdvanceMe Patent. The 271 Patent Blog recently ran a story about this case.

And speaking of the intellectual property community, Vinson & Elkins, our attorneys in this litigation have posted a news release about this case. I also wanted to take the time to thank the team at Vinson & Elkins for their extraordinary work they have done on this case. We couldn't have chosen a better IP firm to handle this matter in the Eastern District of Texas. My hat goes off to Bill Schuurman, Brian Buss, Joey Gray, Floyd Walker, Hilary Preston and Graham Sutliff for their work to invalidate this patent (And for their patience of putting up with a lot of smoke and mirrors thrown to us by the other side and their attorneys). If any one of you are lucky enough to be sued like I was over patent infringment (or if you are the holder of a legitimate patent that you are looking to enforce), I couldn't recommend Vinson & Elkins highly enough for all they have done not only for my company, but the entire merchant cash advance and credit card processing industry.

If you need to choose local counsel for the Eastern District of Texas, Potter Minton was our firm and my thanks go out to Doug McSwane and his team.

I have to give a very special thanks to Jeff Sanders of Roberts & Ritholtz. Jeff was not only instrumental in helping the defendants choose Vinson & Elkins as national counsel and Potter Mitton as local counsel, but provided strategy that was second to none throughout the case.

I also want to thank everyone that came to trial, namely Tim Litle, Larry Bouchard, Lee Suckow, Skip Landon as well as everyone that provided testimony in the case including the former AdvanceMe employees.

And finally, a very special thanks to those not named above that made it possible for me to be able to fight this fight, you know who you are and thank you.

Tuesday, August 14, 2007

As many of you know, I have been involved with a lawsuit from AdvanceMe the past year and a half over their “patent.” They have sued my company and other merchant cash advance companies. Well, I am proud to say we just received word from the court that Judge Davis from the Eastern District of Texas has INVALIDATED the AdvanceMe patent in one of the AdvanceMe patent cases. He writes in his MEMORANDUM OPINION AND ORDER on August 14, 2007 in ADVANCEME INC. vs. RAPIDPAY, LLC, ET AL that “The ‘281 patent is INVALID because it is OBVIOUS and ANTICIPATED."

Judge Davis also wrote, “The Litle & Co. prior art, the LeCard program, the Transmedia program, and the prior art Reserve Accounts were all available in the field at the time of the purported invention. Johnson [-- Barbara Johnson is listed as the inventor of the patent --] merely implemented a predictable variation of these existing methods in establishing her invention. While Johnson’s work exhibits excellent entrepreneurship, it does not entitle AdvanceMe to a legal monopoly on this method of providing financing to small businesses. Rather AdvanceMe must continue to compete in the marketplace for its share of the market, which will benefit the economy and consumers as a whole.”

I believe this is also the first patent case in the Eastern District of Texas whereby the recent Supreme Court ruling on patent obviousness in the KSR Int’l Co. v. Teleflex, Inc. helped invalidate a patent. In reference to the Supreme Court ruling, Judge Davis wrote,"There are multiple prior art references, not considered by the PTO when issuing the patent,that render the patent invalid, especially in light of the Supreme Court’s recent ruling in KSR Int’l Co. v. Teleflex, Inc."

I would like to thank all of those that have helped me put together the information that was used to show the court that this patent was not a new and novel idea.

AdvanceMe has started to sue many companies including mine, AmeriMerchant. We are set to goto trial in January and have a deadline coming up with the courts in August that we must produce all information / evidence that we will be using in trial.

We believe that companies were performing this "invention" well before July 1997 when it was "invented." A patent becomes invalid and unenforceable if one can prove that invention was not novel at the time the application was submitted to the patent office even though it was granted by the patent office. Furthermore, if the inventor knew about similar / existing inventions and didn't tell the patent office then it becomes invalid as well and the plantiff (in this case AdvanceMe) can be liable for legal fees.

With that said, we have identified several prior art systems to invalidate this patent (if you know of any others, please feel free to email me at dg@amerimerchant.com. All inquiries will be kept confidential). One such system was Dining Ala Card that provided cash advances to merchants and was repaid out of a merchant's future credit card receipts (this took place in the early 1990s).

If anyone had interacted with senior management at AdvanceMe prior to September 2005 and believes they knew about similar systems (eg. Clever Ideas, Transmedia, idine/Rewards Network, etc.), please please email me at dg@amerimerchant.com. All inquiries will be kept confidential.

If someone also knows about credit card processors paying third parties instead of the merchant directly before July 1997, please email me.

We believe we have a very strong case that this patent is not a novel invention and there were many lenders/creditors, etc. that were getting paid out of credit card receipts before July 1997 and if the patent office was told about these systems/companies by AdvanceMe during patent prosecution, this patent would never have been granted.

Tuesday, August 7, 2007

I wanted to thank everyone for all the positive feedback / emails I've received since launching this blog. This website has already been featured in many well respected industry publications including The Nilson Report.

My next entry I would like to answer some industry questions that might be out there. Please feel free to post your questions by clicking on the comments link below about the merchant cash advance industry or you can email them directly to me at dg@amerimerchant.com.

Friday, August 3, 2007

Within the past two months, I've been contacted by reporters of a half dozen non-credit card processing industry publications such as big city newspapers, business magazines and local papers who are all planning stories on the merchant cash advance phenomenon. There seems to be a basic underlying premise of all these articles that there is a huge demand in the marketplace for this type of alternative financing as many business owners can not get financing from a bank.

I've heard many nay-sayers tell me that the merchant cash advance space is just a fad. My response to that is in 1995, when I first started my previous business an Internet development company, there was a gentlemen that told me the Internet was just a fad too (Note: I sold that business three years later to a multi-billion dollar telecommunications company). I hope the merchant cash advance industry grows to be at least 1/1000 of the "Internet fad."

About Me

David is the President & CEO of AmeriMerchant, a merchant cash advance provider founded in 2002. AmeriMerchant has over 90 employees and is headquartered in New York City with an additional office in San Mateo, California.
David's previous experience includes co-founding an Internet development company and building it from four to fifty people that was eventually sold to a multi-billion dollar publicly traded telecommunications company.